It pays to be aware of the tax-free benefits available to your business. In our experience businesses loose out because they don’t understand the rules. We see owners miss out on tax-free benefits or penalised for incorrectly applying the rules.
Does your organisation have an annual Christmas party for staff? The tax rules also allow staff parties at other times of the year. You will be entitled to a tax-free benefit if certain conditions are satisfied.
The exemption applies to an annual party such as your Christmas party, or similar annual function such as a summer barbecue provided for your employees. You must make it available to all employees or available to all employees at certain locations, where you have more than one location.
If you provide two or more annual parties or functions, no tax charge arises in respect of the party, or parties, for which cost(s) per head do not exceed £150 in aggregate. You must calculate the cost per head for each function. You must then add the cost per head of subsequent functions. If the total cost per head goes over £150 then choose whichever functions best utilise the £150 exemption. The other function becomes taxable.
Remember the per head exemption applies to both full time and part time staff. Make sure the business pays directly for the function to avoid any issues.
We recommend you plan your staff functions in advance and set a budget for each function so that the total cost per head falls within the HM Revenue and Customs tax-free limits. Remember, it pays to be aware of tax-free benefits available to your business.
Team outings are not just an excuse for time out or fun, they can serve a greater purpose.They can:
- reduce employee stress
- increase team motivation
- assist communication
- and show employees that they are valued members of a great team.
Go to www.gov.uk/tax-company-benefits/tax-free-company-benefits for more details.
